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Gammon v. State Farm Mutual Automobile Insurance Co.

United States District Court, W.D. Virginia, Lynchburg Division

July 22, 2016




         This matter is before the Court upon Defendant’s motion to dismiss. Plaintiff Robert Gammon (“Gammon”) filed this action against State Farm Mutual Automobile Insurance Company (“State Farm”) for allegedly breaching a purported contract between the parties. Additionally, Gammon avers that State Farm is liable for intentional infliction of emotional distress and constructive fraud. Because Gammon has failed state a plausible claim of breach of contract and intentional infliction of emotional distress, I will grant State Farm’s motion dismissing these claims. Also, because Gammon has failed to meet the pleading requirements for fraud under Rule 9(b) of the Federal Rules of Civil Procedure, I will dismiss his constructive fraud claim, but grant Gammon leave to amend the pleading deficiencies.


         Defendant State Farm is a corporation in the business of selling insurance. Am. Compl. ¶ 2. As part of its operations, State Farm recruits and interviews candidates to run independent agencies that sell exclusively State Farm insurance products. Candidates are required to secure licenses and governmental approvals in order to operate these agencies. Id. ¶¶ 8-9.

         Plaintiff Robert Gammon alleges the following in his Amended Complaint. Gammon applied to run an independent agency, and in so doing, disclosed to State Farm his criminal background, which included a twenty-five-year-old felony marijuana conviction. State Farm assured Gammon that this felony conviction would not burden his effort to operate an agency. Id. ¶¶ 10-12.

         On July 15, 2014, State Farm stated that, conditioned upon Gammon securing all required licenses and approvals, the parties would sign an agency contract and, in the meantime, State Farm would provide Gammon with an interim salary of $70, 038.35. Once all licenses were obtained and the contract was signed, Gammon was to operate an independent agency in Lynchburg, Virginia. Id. ¶¶ 14-15. State Farm provided Gammon with an August 4, 2014, start date. Gammon agreed with State Farm’s proposal, and thereafter quit his job of seventeen years. Id. ¶¶ 19, 21.

         Gammon further alleges that he was required by State Farm to secure approval from the Federal Deposit Insurance Corporation (“FDIC”) in order to operate an agency. Id. ¶ 22. This process involved a background check, but State Farm had the option of obtaining a temporary waiver from this practice. According to Gammon’s Amended Complaint, State Farm did not seek such a waiver. Id. ¶ 24. Gammon himself began the process of seeking a waiver in August 2014. On or about October 9, 2014, State Farm asserted that Gammon was unable to secure approval from the FDIC, and thus refused to perform on its earlier proposal. Id. ¶¶ 25-26. Accordingly, Gammon lost employment, and was subsequently unemployed for eleven months. Id. ¶ 29.


         When evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court must accept as true all well-pleaded allegations. See Vitol, S.A. v. Primerose Shipping Co., 708 F.3d 527, 539 (4th Cir. 2013); see also Erickson v. Pardus, 551 U.S. 89, 94 (2007). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and quotation marks omitted). Stated differently, in order to survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).


         A. Breach of Contract

         Gammon claims that State Farm committed breach of contract when it declined to provide an independent agency for him to operate. He asserts that State Farm “refus[ed] to perform on the parties’ agreement, purportedly terminating Plaintiff’s employment.” Am. Compl. ¶ 26.

         Under Virginia law, a breach of contract claim requires a showing of “(1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation.” Ulloa v. QSP, Inc., 271 Va. 72, 79 (2006) (quoting Filak v. George, 267 Va. 612 (2004)).

         1. Gammon has not shown any contractual obligation on ...

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